S&P Sees Hyperscaler AI Spending Topping $1.3 Trillion, Cash Flow Negative

Combined capital expenditure at the world’s largest hyperscalers is projected to exceed $1.3 trillion by 2027, and all six will run negative free operating cash flow through 2026 and 2027 with no recovery projected before 2029, S&P Global Ratings said August 27, 2026, in new research on how the AI buildout is being financed.

The report, “S&P Global Ratings’ View On Artificial Intelligence And Hyperscalers,” examines the funding models at Alphabet (GOOG ), Amazon (AMZN ), Microsoft (MSFT ), Meta, Oracle (ORCL ) and SpaceX. Its central finding is less about the size of the spending than about what is paying for it: operating cash flow no longer covers the bills, so the six are leaning harder on debt, equity issuance, lease commitments and other financing arrangements to keep construction moving.

“As AI infrastructure investment accelerates, the focus is expanding beyond the scale of spending to the funding models, financial commitments and long-term implications that accompany it,” said Naveen Sarma, Managing Director and Sector Lead at S&P Global Ratings. “Understanding how these investments are financed and managed will be increasingly important in assessing credit quality across the sector.”

The Shift From Cash Flow To Credit

The financing mix is where the report does its real work. S&P flags the growing use of joint ventures, special purpose vehicles, residual value guarantees and similar structures, and says they are increasing the complexity of credit analysis. A residual value guarantee, in this context, is a commitment by the hyperscaler to make a lessor or financing partner whole if servers, GPUs or data-center assets are worth less than expected at the end of a lease term — an obligation that sits off the headline debt figure but behaves like debt if hardware values fall.

That structure matters for anyone holding hyperscaler bonds or tracking the companies leasing capacity to them. Contractual commitments and other debt-like obligations are among the items S&P says it is now monitoring, alongside monetization of AI investments, demand durability and overcapacity risk. The more of the buildout that is funded through vehicles and guarantees rather than retained cash, the more the credit exposure disperses across lessors, lenders and joint-venture partners rather than sitting visibly on one balance sheet.

S&P’s models generally assume a 2028 inflection point, with revenues accelerating and capital expenditure growth moderating as monetization improves. Until that point, the agency’s projection leaves a multi-year window in which the six largest buyers of compute are cash-consumers rather than cash-generators on a free operating basis: the period in which the equipment vendors, landlords and power providers on the other side of their purchase orders book the revenue. Securities.io has tracked that flow-through at the site level, from Digital Realty’s 50-megawatt Singapore allocation to Bitdeer’s $400 million of contracted AI capacity inside a 350-megawatt Malaysia build-out, and at the equipment layer in coverage of Vertiv’s cooling and power exposure to the same order cycle.

What The Cash Flow Statements Already Show

The negative-cash-flow projection is a forecast, but the direction is visible in current filings. Microsoft, one of the six named in the report, spent $115.9 billion on additions to property and equipment in its fiscal year ended June 30, 2026, against $182.9 billion in net cash from operations (up from $64.6 billion of additions a year earlier), per its July 29, 2026 earnings release. That 80% jump in a single year still left Microsoft cash-flow positive after capex; S&P’s projection implies that even companies of that scale stop self-funding as the 2026–2027 tranches land, and that the smaller balance sheets in the group get there sooner.

Microsoft’s filing also illustrates the demand side of S&P’s 2028 thesis: commercial remaining performance obligation, contracted business not yet recognized as revenue, rose 84% year over year to $678 billion as of June 30, 2026, and Azure revenue surpassed $100 billion for the fiscal year. Those contracted backlogs are the revenue base the agency’s models are counting on when they assume monetization catches up with construction.

The Report’s Own Boundaries

S&P states the report does not constitute a rating action. No hyperscaler’s credit rating changed on its publication, and none of the six names carries a new outlook as a result of it. The projections are the agency’s own model assumptions, including the 2028 inflection and the 2029 cash-flow recovery, and the report itself lists the conditions that would stress them: AI monetization arriving slower than modeled, demand proving less durable, or overcapacity emerging if buildout outruns usage.

For bondholders and the financing counterparties now carrying residual value guarantees and lease commitments, the operative dates in the analysis are 2027 (when cumulative capex crosses $1.3 trillion), 2028, the modeled revenue inflection, and 2029, the first year S&P projects positive free operating cash flow returns across the group.